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New research from NS&I shows how the financial planning landscape has changed over the last decade

  • Over the last 10 years, there has been a significant increase in the number of financial advisers identifying as financial planners.
  • The proportion of advice firms offering cash flow modelling has nearly quadrupled in the last decade.
  • Nine in 10 advice firms now offer holistic financial planning services as part, or all of their overall offer.
  • Seven in 10 advice firms advise on cash as part of their proposition and are doing so on a more frequent basis than 10 years ago.

New research commissioned by NS&I shows some significant changes in the financial planning landscape over the last decade. A survey of 300 financial advisers and financial planners was conducted by Discovery Research in September and October 2020 by telephone interview.

The research shows a significant increase in the number of financial advisers who identify as financial planners over the past 10 years, rising from 24% in 2010 to 42% in 2020. The majority (58%) still identify themselves as financial advisers. However, there is very little difference in the services offered by those respondents who identify as financial planners, compared with those respondents who identify as financial advisers. Most firms are offering holistic financial planning as part of their proposition now.

These figures do not tell the whole story though. For example, how they position themselves to clients could be very different to how they position themselves to their peers, colleagues and professional contacts. Clients may not understand the term ‘financial planning’ to the same degree as ‘financial advice’.

The biggest change in the financial advice market over the past 10 years is the very significant growth in the proportion of advice firms that offer cash flow modelling as part of their services. This has risen from 21% of advice firms in 2010 to 80% of advice firms in 2020. Those respondents who identify as financial planners are slightly more likely to offer cash flow modelling than advisers (85% vs 76%), but the marginal difference suggests that in reality there is minimal difference between the two terms. 83% of respondents who said they offer holistic financial planning, said that they also offer cash flow modelling. So cash flow modelling can be seen as a proxy for holistic financial planning, and thus the inclusion of cash in discussions with clients.

Nine in 10 advice firms currently offer holistic financial planning services as part, or all of their overall offer. The proportion of firms that offer advice on cash has increased a little in comparison to 10 years ago, from 67% to 71%, but more than one in three (36%) are now offering advice on cash on a more frequent basis than 10 years ago.

Other key findings from the research are:

Prolonged low interest rates are seen as a barrier to cash assets evolving for the foreseeable future

The research asked advisers in what ways they thought that cash assets will evolve in the future, in terms of products, technology and the advice industry’s approach to cash. Nearly a third (32%) of respondents said that low interest rates meant that cash assets are unlikely to evolve for the foreseeable future. Nearly a quarter (24%) of respondents said that they thought that the technology around cash assets will continue to evolve and therefore, so will the way that their clients will deal with them.

Coronavirus has had a limited impact on financial planning businesses

The research also asked advisers if the coronavirus pandemic had changed the way their business was run. Nearly four in 10 (38%) of respondents said that their clients have become more risk averse, and half (50%) of respondents said that there have been changes in products sought by or recommended to clients. 82% of respondents said that they are working from home, having more virtual meetings, and increasing their use of online technology to serve their clients.

Andrew Pike, Head of Intermediary Relationships at NS&I, said:

“This research shows that holistic financial planning has become much more widespread in the financial advice profession in the last decade, which has meant that cash is no longer considered a secondary concern by most advisers and planners, but instead an integral part of the portfolio planning process.”

–Ends–

Notes to Editors

1. Discovery Research spoke to 300 financial advisers and financial planners via telephone CATI interviews between 16 September 2020 and 1 October 2020.

2. The key objectives of the research were to understand how the financial planning landscape has changed over the last decade, and to explore the hypotheses that over this time period there has been: an increase in financial planning; an increase in advisers recommending / using cash in portfolios; and an increase in cash flow modelling. To achieve this, the research aimed to understand the proportion of financial advisers offering each of the above at three points in time: currently, five years ago and 10 years ago.

3. For this survey, when we say “financial advice”, we are referring to targeted advice offered to a client based on their specific needs, more suited to the smaller to medium level saver/investor these days, though historically offered to most clients. On the other hand, we define “financial planning” as more comprehensive advice to a client that covers a complete review of the current state of all their finances (including cash). This would include ‘whole of market’ analysis, tax planning, inheritance planning, and provides a plan to achieve a client’s long-term financial and life goals.

4. NS&I is one of the largest savings organisations in the UK, offering a range of savings and investments to 25 million customers. All products offer 100% capital security, because NS&I is backed by HM Treasury.

5. For further information, please contact the NS&I media team.

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